Volume : 4 | Issue : 6 | June 2015 • ISSN No 2277 - 8179

Research Paper

Commerce
Advertising Industry in India – The KEYWORDS : Advertising ,Growth ,Market,
Study
Prospective

Nidhi Aggarwal Assistant Professor in Commerce in DAV College, Jalandhar, Punjab.

ABSTRACT Advertising industry in India is growing at a very fastpace It has got bright future and can add to development of
Indian economy. Many advertising firms have been opened in India –small as well as big. Growing income level, shift
in lifestyle, Increase in use of smartphones ,online shopping, brand awareness, availability of products, healthy policies of Indian Government
are some of the factors due to which the future of advertising industry is bright. In this paper, attempt has been made to discuss these factors

Introduction likely to increase in the financial sector, driven by Reserve Bank

Advertising is a big business. It is becoming stronger and big- of India (RBI) policies which could result in a more favourable
ger. Firms in the advertising industry prepare advertisements business environment. Also, proposed licences for new banks
for other companies and organisations and design campaigns and better market sentiments render the advertising and mar-
to promote the interests and image of their clients. This in- keting industry in India a fertile space.
dustry includes media representatives-firms that sell adver-
tising space for publications, radio, television, and the Inter- The Governments of India and Canada have also signed an
net; display advertisers-businesses engaged in creating and audio-visual co-production deal which facilitates producers
designing public display ads for use in shopping malls, on from both countries to harness their collective artistic, techni-
billboards, or in similar media; and direct mail advertisers. A cal, financial and marketing resources, and encourage exchange
firm that purchases advertising time (or space) from media of culture and art between the two countries. The agreement
outlets, thereafter reselling it to advertising agencies or indi- is also likely to lead to better promotion of Indian locales for
vidual companies directly, is considered a media buying agency. shooting films. “The agreement will also lead to the transparent
funding of film production and boost export of Indian films into
Most advertising firms specialise in a particular market niche. the Canadian market,” as per the agreement.
Some companies produce and solicit outdoor advertising, such
as billboards and electric displays. Others place ads in buses, India and Poland are seeking to enhance cooperation in the dig-
subways, taxis, airports, and bus terminals. A small number of itisation and restoration of film archives. This was decided in a
firms produce aerial advertising, while others distribute circu- meeting between Mr BimalJulka, Secretary of Information and
lars, handbills, and free samples. Groups within agencies have Broadcasting, India, and a delegation from Poland led by Ms
been created to serve their clients’ electronic advertising needs MalgorzataOmilanowska, Secretary of State. The two countries
on the Internet. Online advertisements link users to a company will form a joint working group that will help improve coopera-
or product’s Web site, where information such as new prod- tion in fields such as student exchange programmes, animation,
uct announcements, contests, and product catalogue appears. films and digitisation, among others.

The Indian advertising industry is a very upcoming and promis- Market Size
ing sector. However there is severe competition and there is sur- With the luxury market expected to grow at over 20 per cent
vival for the fittest and the best. In this sector what matters the year on year, PE investments in the luxury segment are expected
most is knowledge and experience of the work and the industry to increase and support the enhanced size of the Indian luxury
and its functioning. The more the knowledge you have the better market. High internet penetration across tier-II and tier-III cities
the productivity you give. along with high disposable income shall lead to approximately
80 million transactions on the internet by 2020. As a result, the
With increasing brand awareness amongst the Indian youth luxury consumption is going to increase manifold in the country.
and purchasing power of the upper class in tier II and III cities,
spending by Indian consumers is expected to grow four times to With this level of growth and subsequent investment from lux-
US$ 4.2 trillion by 2017, according to a joint study by YES Bank ury businesses, it is estimated that by 2020 the luxury market in
and a leading industry body. According to the joint report, the India will be responsible for employing 1.8 million people. This
Indian luxury market is estimated to be worth US$ 18 billion by will not only help in preserving traditional craft skills and herit-
2017 from the current level of US$ 14 billion with unprecedented age, but will also support communities, create employment and
growth in luxury categories including fashion, automobiles and provide training.
fine dining. Such high growth potential in consumer spending
attracts huge interest in different marketing and strategy initia- The online advertising market in India will touch Rs 3,575 crore
tives. (577.97 million) by March 2015, a 30 per cent rise from Rs 2,750
crore (US$ 444.59 million) in March 2014, as per a joint study by
While various estimates exists on the size and growth potential the Internet and Mobile Association of India (IAMAI) and IMRB
of the Indian luxury market; most estimates are unanimous on International. Of the current Rs 2,750 crore (US$ 444.59 million)
anticipated growth rates of 20 per cent given the tremendous digital advertisement market, search and display contribute the
potential in products such as apparel and accessories, pens, most - search advertisements constitute 38 per cent of total ad-
home décor, watches, jewellery, service like spas, travel & tour- vertisement spends followed by display advertisement at 29 per
ism, fine dining & hotels and assets: yachts, fine art, automo- cent, as per the study.
biles & real estate
The Internet’s share in total advertising revenue is anticipated to
Role of Government grow twofold from eight per cent in 2013 to 16 per cent in 2018,
The Indian government has given tremendous support to the as per a joint report by Confederation of Indian Industry (CII)
advertising and marketing industry. Advertising expenditure is and PricewaterhouseCoopers (PwC). Online advertising, which

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Research Paper Volume : 4 | Issue : 6 | June 2015 • ISSN No 2277 - 8179

was estimated at Rs 2,900 crore (US$ 468.84 million) in 2013, • Most of the top 20 agencies in India have a global partner
could jump threefold to Rs 10,000 crore (US$ 1.61 billion) in five or owner, which should provide an immediate link to global
years, increasing at a compound annual rate of 28 per cent. markets.
• Our production standards in TV and print have improved:
Also, according to the report, Indians paid Rs 25,200 crore (US$ With a vibrant animation software industry, we have access
4.07 billion) to access the Internet in 2013, a figure greater than to this area of TV production.
the Rs 22,300 crore (US$ 3.61 billion) the print medium garnered • India’s advanced IT capabilities can be used to develop Web-
in subscription and advertising. based communication packages for global clients.

Future of Advertising Industry According to an estimate of GroupM ,The growth in 2014 to Rs

The advertising and marketing sector in India is expected to en- 13,490 crores, is being attributed to an increase in spending due
joy a good run. Growth is expected in retail advertisement, on to elections (both General and State elections), as well as ad-
the back of factors such as several players entering the food and vertising from categories like e-commerce and Telecom. “The
beverages segment, e-commerce gaining more popularity in the FMCG sector, which contributes to nearly a third of the AdEx,
country, and domestic companies testing out the waters. The ru- had a steady year, growing broadly in line with the industry aver-
ral region is a potentially profitable target. For instance, in the age,” GroupM said in a statement.
automobiles sector, the focus of two-wheelers on rural areas
could mean more launches and more advertising spends. The CVL Srinivas, CEO, GroupM South Asia said in a statement that
telecom sector could see growth as well, driven by better smart- advertisers are cautious but optimistic: “With a new Govern-
phone penetration and service providers cutting down on prices. ment coming to power the negative sentiment has lifted but
there is still some bit of caution amongst advertisers.We contin-
India offers huge business potential for online advertising indus- ue to operate in the same zone as last year at an overall level.” In
try with rising population, growing income level and changing addition, GroupM is “seeing a lot more confidence amongst local
lifestyle. With increasing number of educated people and mi- businesses to invest in brand building than before. This is a posi-
gration to urban areas, increase adoption in Internet and online tive sign for the industry. Penetration of smartphones coupled
advertising is being witnessed. Despite the growth, many chal- with the popularity of online video is making FMCG spend more
lenges continue to plague the industry such as underdeveloped on digital. Another trend is the emergence of categories like e-
infrastructure and lack of faith of both advertisers and audiences. Commerce and the increased competition in Telecom both of
which are aiding the growth of traditional media channels in-
The online advertising is developing rapidly in the country but cluding Print and TV apart from Digital.”
a fall in advertising revenues have been noticed during 2009
due to the global economy slowdown, while overall adver- India’s entertainment and media sector is expected to grow
tising industry in the country registered 22.00% and 12.04% steadily over the next five years as per CII-PwC’s report, titled
growth in 2007 & 2008. The total advertising spending declined ‘India Entertainment & Media Outlook 2014’. The industry is
6.80% from 2008 level due to its dependency over other indus- expected to exceed Rs 227,000 crore (US$ 36.49 billion) by 2018,
tries and country’s economy. Year 2010 has shown a recovery growing at compound annual growth rate (CAGR) of 15 per cent
period and advertising spending increased by 19.27% from between 2013 and 2018.
2009 figures (USD ~ billion in 2010 and USD ~ billion in 2009).
Significantly, with the increased penetration of smartphones and
In 2010, demand for online advertising grew 34.14% and sur- expansion of 3G network in India, the country is likely to see
passed growth rate of other advertising formats like TV, print around nine billion mobile application (apps) downloads dur-
and radio. The factors that helped the industry growth were, ing 2015, which is five times more than 1.56 billion in 2012, as
increase in internet penetration, e-commerce, social network- per Deloitte’s India Technology, Media & Entertainment and Tel-
ing and population growth. The online advertising industry ecom (TMT) Predictions. This uptick in app-downloads is also
grew from USD ~ million in 2006 to USD ~ million in 2010. expected to increase the revenue from paid apps to an estimated
over Rs 15 billion (US$ 241.16 million) as against Rs 9 billion
Display advertising has always been the leading category in (US$ 144.7 million) in 2014, Deloitte said.
the online advertising market. In 2010, display advertising ac-
counted for 48.25% of the online advertising; USD ~ million and Additionally, industry estimates reveal that video games industry
22% growth over 2009 was registered by the segment. In India, grew at a record 16 per cent in 2013 over 2012; wherein its net
the online display advertising spent per user was INR ~ in 2009, worth rose to US$ 277 million. Another report by Research and
which is low when compared to other developed countries. Also, Markets stated that the Indian animation industry was valued at
in terms of USD ad spent per user declined in 2009 compared to US$ 247 million in 2013 and is forecasted to grow at 15-20 per
2008 due to fall in USD currency rate. cent per annum.

The advertising industry in India has several competitive advan- The foreign direct investment (FDI) inflows in the information
tages: and broadcasting (I&B) sector (including print media) in the pe-
riod April 2000 – January 2015 stood at US$ 3,890.94 million, as
• India has a rich pool of strategic planning, creative and me- per data released by Department of Industrial Policy and Promo-
dia services personnel: Indeed, Indian advertising industry tion (DIPP).
has been exporting senior-level talent to many countries,
particularly to the Gulf, South-East Asia, China, the UK and Significantly, with the increased penetration of smartphones and
the US. Indian talent is recognised and respected in global expansion of 3G network in India, the country is likely to see
agency networks. around nine billion mobile application (apps) downloads dur-
• No other country has access to so many trained manage- ing 2015, which is five times more than 1.56 billion in 2012, as
ment graduates who can provide strategic inputs for brand per Deloitte’s India Technology, Media & Entertainment and Tel-
and media planning. ecom (TMT) Predictions. This uptick in app-downloads is also
• Indians are multicultural: we learn at least two languages expected to increase the revenue from paid apps to an estimated
and that gives us a head start in understanding cultural di- over Rs 15 billion (US$ 241.16 million) as against Rs 9 billion
versity. (US$ 144.7 million) in 2014, Deloitte said.

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 Volume : 4 | Issue : 6 | June 2015 • ISSN No 2277 - 8179
Research Paper

Conclusion
Advertising industry in India has got bright prospects. There are
many factors which can and are contributing to the growth of
this industry.Growing income level, shift in lifestyle, Increase in
use of smartphones ,online shopping, brand awareness, availabil-
ity of products, healthy policies of Indian Government are some
of the factors due to which the future of advertising industry is
bright. But to have healthy growth ,Indian govt. must ensure
that the malpractices of marketers like deceptive ads, mislead-
ing ads , unethical ads are curtailed so that power of advertising
is properly used to inform and persuade the consumer.

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